Tax Filing for Freelancers: 9 Easy Tips

“Sumit, we are paying you ₹ 50,000 for the blogs written for our website. We have deducted ₹ 5,000 as TDS. You can claim it back or offset against your tax liability while filing the income tax return”, Sumit got a mail from his client.

Ever since he stepped into the world of freelancing, he had a paralyzing fear for return filing. He always skipped any discussion related to income tax or its return.

However, after today’s email, he knew the time had come for him to face the fear of return filing. For once, he decided to sacrifice the TDS amount of ₹ 5,000. But, since 3 clients had deducted a total of ₹ 45,000 as TDS that year, it was compulsory for him to file ITR to claim back the refund.

Not just Sumit, almost every freelancer gets nervous during the tax filing season. If you are also one of those, keep reading this blog. We are going to tell 9 tips that will make the tax filing easy as a cakewalk –

1. Set a reminder of the due date

For FY 2018-19 (April 1, 2018 – March 31, 2019), July 31 is the due date of filing an income tax return. Make sure to submit it till due date to avoid penalties and interest.

2. Know your income category

A freelancer or consultant is treated as a businessperson for income tax law. So, whether you are a freelance content writer or a website developer, your income will be classified under “Income from Profits of Business & Profession”.

3. Know which form is applicable

There are various forms for filing income tax, each meant for a different purpose. Before you start filling the return, you should know which one is applicable, so you don’t file the wrong one.

ITR-3 and ITR-4 forms are both meant for reporting business income. However, there are some key differences between the two –

  • You can’t report any salary income in ITR-3 form. So, if you are doing job and side by side earning a part-time income, you have to file ITR-4.
  • ITR-3 requires taxpayers to maintain books of accounts. If you don’t want to take an additional burden of maintaining accounting records, you should opt for ITR-4.

4. Keep track of bills

If you file ITR-4, you can claim expenses as 50% of the gross receipts (total amount received from clients) as the expenses. Hence, your net profit for tax purpose will be 50% of the gross receipts.

However, you should make sure to save as many receipts and bills related to business expenses as possible. Especially, business travel related bills, software subscription invoices, client meeting bills, co-working office rent receipt, etc. should be preserved for future reference.

You can’t deduct the personal expenses from the business income; hence, there is no need for keeping those receipts and bills safe.

Read our blog on tax saving for freelancers, that might help save you a lot (50% to be exact) of tax and bring an untaxed smile on your face.

5. Include other incomes

Apart from the salary and freelance income, you might be earning interest on fixed deposit or saving bank balance. You must include these additional incomes in total income earned during the year while filing taxes.  

6. Check Form 26AS

Keeping track of the TDS deducted by the clients can get trickier when the amounts are bigger, and clients are many. Form 26AS contains information about TDS deducted by the clients and deposited with Government, taxes you deposited, refunds you probably already received, etc. You can download 26AS from Income Tax Website. If you want to know more about Form 26AS, WizCounsel has got you covered with a separate detailed blog on it. To read the blog, click here.

7. Don’t forget the deductions

Deductions help you reduce your taxable income and the taxes thereon. Any payment for life insurance policy or repayment of home loan etc. can be claimed as deduction under Section 80C. Also, if you have taken any Mediclaim policy for yourself or your family, you can claim it under 80D. Took an education loan for higher studies? 80E is the section to claim a deduction of interest on such loan.

8. E-verify the return or send an acknowledgment to CPC

The return filing process isn’t completed even after you click the ‘SUBMIT’ button. You have to either e-verify the return using Aadhar OTP or send an acknowledgment copy to CPC, Bengaluru.

If you don’t wish to e-verify your return, you can download ITR-V from the income tax website, sign it and post it on the address mentioned in ITR-V copy.  

Tax Filing for Freelancers: 9 Easy Tips

9. Hire a pro

When it comes to filing taxes, even a small mistake can snowball into a big problem. If you’re not familiar with tax laws, consider hiring experienced professional to help with your taxes.

Tax-filing can be daunting. Also, all filed returns are scrutinized with a fine-toothed comb. Even if you do hire a professional, it’s always better to know how things work, so you’re not caught off-guard.

Got any more questions or concerns related to return filing? Fill up the comment section and our team will reply back to each query at the earliest.

Have a tension free tax season with us. WizCounsel helps you find & hire Tax Experts for tax filing and, Income Tax Return Filing.



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